If I have $100 USD at an exchange, I can buy about $100 worth of bitcoins.

Then the person I send those coins to can go to the same exchange and convert those bitcoins back to just about $100 USD. There will be some loss due to exchange fees, so maybe when all is said and done the person I sent the coins to gets only $99.

The point is that this process is identical whether you are sitting on your coins or not. This is also identical whether the BTC/USD exchange rate is $14 or $40.

Where the problem comes in with you sitting on coins is whether you will you continue to hold if there is a selloff underway, and thus make the selloff even worse.

So the problem comes down to it contributing to "hoarding" increases exchange rate risk.  But it does not prevent others from using bitcoins as a currency for trade.